We’re Smarter Than That

Voters in New York’s 23rd recently received a mailing from the National Association or Realtors bearing a photo of our congressman, Rep. Tom Reed. “Congressman TOM REED,” the pamphlet read, “PROTECTING HOME OWNERSHIP By Preserving the Federal Property Tax Deduction.”

I scratched my head as I read it. My wife and I had just deducted the local school tax and the property tax when we filed our federal income taxes a couple of weeks ago. Was someone going to take that deduction away? I hadn’t heard anything about that, and a Google search turned up nothing that referred to such a proposal.

Then a light bulb came on. This brochure must be about the Alternative Minimum Tax, though no mention is made of it. Tom Reed wants to repeal the AMT. This is one of those Reed Tea Party positions that so endears him to the rich.

The AMT injects an element of fairness into the tax code by insuring that the wealthy bear something like their fair share of the tax burden even though they have a slew of deductions. Imagine a wealthy couple. They have a very nice home with a great deal of land. For getaways, they have another such home with a terrific view. The property taxes are sky high, but hey, it’s worth it.

If this couple were to calculate their taxes in the ordinary way, they would subtract their property taxes and their other deductions from their gross income, and if their property taxes were particularly high, they could owe very little in federal income tax. In effect, by allowing such a big property tax deduction, the federal government would be subsidizing their ownership of two expensive properties. The government would be helping the rich, while those less fortunate would have to make up the difference by paying a disproportionate share of the taxes collected.

The AMT helps to prevent this by requiring taxpayers to calculate their taxes both in the ordinary way and in an alternative way, paying whichever of the two is higher. In the alternative way, the property tax deduction and certain other deductions (though not the charitable giving deduction) are disallowed, and this yields a higher adjusted gross income.  From this, the taxpayer is allowed to subtract an AMT “exemption,” which for 2013 was $80,800. (This amount is adjusted each year for inflation.)  The AMT is 28 per cent of whatever is left after the exemption is subtracted.

According to tax experts, taxpayers need to start worrying about having to pay the AMT when their deductions approach the AMT exemption. In New York’s 23d, couples are lucky to have an income of $80,800, let alone deductions of that amount. Rather, the AMT affects the well to do, and these are the people Reed would help by repealing the AMT.

The Tax Policy Center, jointly sponsored by the Brookings Institution and the Urban Institute, notes that in 2013, the AMT was paid by just 1 per cent of taxpayers with incomes below $100,000 and 2 per cent of those with incomes between $100,000 and $200,000. About a third of those with incomes between $200,000 and $500,000 paid the AMT.

If the AMT were abolished, the wealthy could shelter income from federal taxes by buying properties and deducting the property taxes from their income. The demand for expensive homes would increase, prices would likely rise, and costly properties would change hands more often. Profits in the real estate industry would increase. Perhaps this has something to do with why the National Association of Realtors is so fond of Rep. Reed.

The National Association of Realtors mailing shows a lack of respect for the voters in New York’s 23rd. The NAR must believe that middle class voters in the district can be fooled into voting against their own interests for the benefit of the wealthy. We’re smarter than that.

 

 

 

 

 

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21 Responses to We’re Smarter Than That

  1. whungerford says:

    There are current proposals to cut tax rates in exchange for closing tax loopholes and repealing deductions such as the home mortgage deduction. The Camp Tax proposal, which Tom supports, stops short of repealing the home mortgage deduction but does cap it. The realtors may be sending Tom a message: stop backing the Camp proposal.

    • whungerford says:

      The Camp proposal does end the State and Local property tax deduction.

      • pystew says:

        Let me get this straight…Reed supports ending the deduction (State and Local property tax) that most Middle Class families benefit from. He also supports limiting the home mortgage tax deduction, also a great benefit to Middle Class families. Reed’s double whammy against the Middle Class.

      • whungerford says:

        Yes, but the NAR seems to ignore Tom’s support for the Camp plan backing Reed as if it weren’t true. What’s going on here? Is Tom telling the realtors one thing and his constituents another? Are the realtors sending him a message to get right and stay right? Why should what is good for the realtors necessarily be good for NY-23?

  2. BOB McGILL says:

    The NAR must believe that middle class voters in the district can be fooled into voting against their own interests for the benefit of the wealthy.
    ” We’re smarter than that. ” ? I don’t think so. you’re so obsessed with hating the rich, because you’re not rich, that you may vote for Martha, which is in fact, voting against your own interests !
    🙂

  3. whungerford says:

    Why should Tom’s constituents care, Bob, what the National Association of Realtors thinks? Who do you suppose they are looking out for?

    • BOB McGILL says:

      you still don’t seem to understand how anything works. Of course the NAR is looking out for themselves, after all they provide a public service. Do you think the public has no interest in the sale of real estate? Realtors need vibrant market to make a living, the public needs the same, after all, their home is the publics largest investment. Last I knew, the average family, in the US ,moves every 5 years. pystew was a teacher, do you think he would want school taxes to stay the same and not go up if it meant not getting a raise ? Hell NO, he wouldn’t care how high school taxes got as long as he got his raise.

      • whungerford says:

        As we agree that the NAR is looking out for themselves, we should consider if we are satisfied with Tom Reed’s service or not. What the NAR thinks is of no importance. There is little reason to think that the NAR’s interest coincides with that of others.

      • Anne says:

        Wait until the NAR sees what fracking–supported by their hero Reed–does to property values. Hilarious!

        • BOB McGILL says:

          energyindepth.org/wp…/Marcellus-Broome_County-Final-9-09.pdf‎CachedSimilar
          Mar 6, 2009 … Prepared for Broome County, New York. By. Bernard L. … 70 percent of the
          state’s 14,000 operating oil and gas wells. But over the past two …
          read this 🙂

          • BOB McGILL says:

            energyindepth.org/wp…/Marcellus-Broome_County-Final-9-09.pdf‎CachedSimilar
            don’t be lazy if the link doesn’t work, try to find it

          • pystew says:

            Why even try to open it…it is dated five years ago? If you really wanted us know what it said you would have summarized it and give us the full link to use.

          • BOB McGILL says:

            “Why even try to open it…it is dated five years ago? If you really wanted us know what it said you would have summarized it and give us the full link to use.” really pstew ? READ your COMPANION FACEBOOK PAGE. The thing is about 10 pages long, why go through all that, when I ALREADY KNOW NO-ONE WILL READ IT, because you may find out that YOU ARE WRONG, again !

      • pystew says:

        Bob, I usually just skim your postings, if I read them at all. What caught my eye on this one is that you are smearing me again. Don’t put words in my mouth. Don’t ever assume that I think the way you do.

        Do you know the difference between PUBLIC and PRIVATE? Real Estate is a PRIVATE service, not a PUBLIC one. I hope that Waterloo does not use PUBLIC funds to buy a person a home. I know Penn Yan doesn’t. I understand the Real Estate Dealers want to make as much money as they can, but that is not the PUBLIC’s concern.

        I agree that we are a very mobil society, but that has nothing to do with the AMT. How many of of the people/families that move every 5 years more than two houses? (Have you even read the article?) The AMT affects people who have more than two properties that have mortgages. In other words, the rich, and may include Rep. Reed himself. The NAR wants Reed to help repeal the AMT (Which Ronald Reagan signed into law in 1982 and now the GOP is against) so the NAR can sell houses to those who want a third (or fourth, or fifth) house. Why should we subsidize someone who can afford that luxury?

        Reed supports this move because the deep-pocket puppet masters tells him to. He ignores the concerns of “We The People” and is a lap dog for the “We The Rich”. Talk about voting against YOUR OWN best interest.

  4. Deb Meeker says:

    That slick mailer, all the way from the NAR’s Chicago headquarters, reminded me of Rep. Reed’s Facebook page being bombarded with “Thanks!”, from the No Labels supporters when they were contacted en mass, and asked to contact him in support of the Great Leap he took for bipartisanship! These “supporters” had absolutely no idea about Tom’s voting record, nor did they care…And the majority were from where? – out-of-state.
    Full of outright lies, this recent mailer assures us among other things, that “Tom Reed is a leading advocate for helping American families facing tough economic times”. Yep, he is making us face those times alright, but with absolutely no help from him.

    • whungerford says:

      We haven’t heard much lately about “bipartisan hero,” “fix not fight,” “no labels (and no finger pointing),” or much else besides photo ops.

  5. josephurban says:

    Nice flyers. They didn’t say anything of substance. It is in the interests of the NAR to drive up housing prices. It drives up commissions. Part of the financial meltdown, remember , was due to the inflated housing prices encouraged by realtors and banks. Inflated housing prices also have a side effect of driving up your property taxes. But, the NAR has a right to support those Congressmen who see this as a good thing.

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